Bitwise introduces Avalanche ETP with staking rewards and AVAX exposure
This investment vehicle aims to produce returns by engaging in network validation activities, incorporating an earnings element alongside passive market exposure.
A new spot Avalanche exchange-traded product has been introduced by Bitwise Asset Management, providing investors with direct exposure to the Avalanche token alongside the opportunity to earn staking rewards on a significant portion of the fund's assets.
The asset manager intends to stake approximately 70% of the AVAX tokens it holds using proprietary infrastructure, while keeping around 30% available in liquid reserves to handle redemption requests and meet operational requirements.
Trading commenced on Wednesday at the NYSE under the ticker symbol BAVA, with shares finishing the day approximately 1.5% higher at $25.50, based on data from Yahoo Finance. The Avalanche token (AVAX) stood at $9.52 in trading, reflecting a 1.8% increase, per CoinMarketCap data.
The Wednesday announcement revealed that the product features a 0.34% sponsor fee, though this has been temporarily reduced to 0% for the initial month on assets up to $500 million, and the structure allows for periodic distribution of net investment income, which includes staking rewards, directly to shareholders.
The fund maintains direct holdings of AVAX and employs Bitwise Onchain Solutions, an internal staking division, to engage in network validation and collect rewards, which are distributed as additional tokens. As of mid-April, Avalanche staking rewards stood at approximately 5.4%, the announcement stated.
As a Layer-1 blockchain, Avalanche was engineered for high transaction throughput and minimal latency. The network supports various tokenization applications and enterprise-level pilot programs, including collaborations with FIFA, Wyoming's state-sponsored stablecoin initiatives, and projects involving corporations like Toyota and financial institutions such as BlackRock.
This latest fund represents one of several recent Avalanche fund announcements in the past few weeks. Just last week, Nasdaq submitted documentation to the US Securities and Exchange Commission (SEC) requesting approval to list shares of the VanEck Avalanche Trust, a proposed ETF that would offer AVAX exposure under regulations governing commodity-based trust shares.
Bitcoin ETFs and DATs hold an increasing amount of Bitcoin
Bitwise's Avalanche ETF launch arrives during a period when exchange-traded cryptocurrency products and publicly listed corporations are steadily increasing their portion of Bitcoin's (BTC) available supply.
Data from BitBO.io indicates that Bitcoin ETFs collectively control more than 1.29 million BTC, representing just over 6% of the circulating supply. Additionally, public companies maintain 1.17 million BTC on their corporate balance sheets, according to statistics from BitcoinTreasuries.NET. When combined, ETF holdings and corporate reserves now represent approximately 12% of Bitcoin's total circulating supply.
Within the ETF sector, the largest accumulator is BlackRock's iShares Bitcoin Trust, maintaining approximately 791,000 BTC, which equals roughly 3.8% of the total supply, with Grayscale's Bitcoin Trust in second position holding around 153,600 BTC, representing about 0.7%.
Traditional banks have also begun entering this investment space beyond asset management firms. Earlier in the month, the Morgan Stanley Bitcoin Trust (MSBT), representing the first spot Bitcoin ETF launched by a US banking institution, saw $30.6 million in inflows during its initial trading session and produced approximately $34 million in first-day trading volume.
On Tuesday, Goldman Sachs submitted filings to the SEC proposing a Bitcoin-linked exchange-traded fund structured to produce income while minimizing exposure to the digital asset's price volatility. This proposed investment vehicle would allocate capital to Bitcoin ETPs and engage in selling call options as a strategy to generate revenue while reducing exposure to significant price fluctuations.
In the public company category, Strategy, recognized as the first Bitcoin treasury company and led by chairman Michael Saylor, maintains holdings of 780,897 Bitcoin, representing approximately 4% of the overall supply.
Government entities worldwide also hold a collective 3% of the circulating Bitcoin supply, with approximately 649,870 BTC recorded on their ledgers. The largest government holder is the United States with about 328,000 BTC, followed by China holding roughly 190,000 BTC and the United Kingdom maintaining more than 61,000 BTC.
The price of Bitcoin has declined from its peak of around $126,000 reached in October, currently trading near $75,100, according to data from CoinGecko.